What a way to end the year – the House issued a spending bill that included tax breaks and a two year delay for the Cadillac tax and medical device tax. On top of that, the law’s health insurance tax is also suspended for a year. Political and industry leaders expressed a concern that the tax discouraged innovation in an industry experiencing disruption. Now, medical device businesses have an opportunity to start the year off on a strong note.
As discussed in “Updated: Medical device tax suspended in $1.8T federal budget,” posted by Varun Saxena on FierceMedicalDevices.com, Congress has put a hold on these two key Affordable Care Act (ACA) taxes for the next two years. There have already been several attempts to repeal the ACA and the taxes needed to provide funding to the program. Medtronic applauds the move as the tax could have cost the company nearly $210 million in 2016, impacting sales and business growth. OrthoPediatrics is also relieved and plans to remove the planned expenses and earmarked cash from their medical device tax budget and invest in programs as well as developing new projects. CA’s Masimo plans to increase investment in research and development. With these tax burdens off their back, clearly medical device manufacturers are finding new ways to thrive without having to increase prices or lay off their workforce.
Although the suspension of these taxes is only for a short two year period, there is talk that they could become permanent depending on the next president and the state of Congress. While there are no guarantees, medical device manufacturers have at least two good years to make the most of the situation and push ‘full steam ahead’ with plans for new products and business growth. To support these efforts, an enterprise resource planning (ERP) solution provides a solid foundation on which to build strategic plans, budgets, and gain greater insight and control over finances.
Modern ERP solutions, including Microsoft Dynamics ERP, offer financial management, product and project management, supply chain and inventory control, and other features designed for the medical device industry. Contact HSO to learn how ERP can support business growth as you take advantage of the current medical device tax suspension.